Joe Dorame David H. Dingus - Chief Executive Officer, President and Director Dana L. Perry - Chief Financial Officer, Senior Vice President of Finance, Secretary and Director

Brent Thielman - D.A. Davidson & Co., Research Division Christopher Schon Williams - BB&T Capital Markets, Research Division John Franzreb - Sidoti & Company, LLC Jonathan P. Braatz - Kansas City Capital Associates Robert Longnecker Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division

Good morning, and welcome to the AZZ incorporated Third Quarter of Fiscal Year 2013 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Joe Dorame of Lytham Partners. Please go ahead, sir.

Thank you, Denise. Good morning, and thank for joining us today to review the financial results for AZZ incorporated for the third quarter of fiscal year 2013 ended November 30, 2012. As Denise indicated, my name is Joe Dorame. I'm with Lytham Partners, and we are the Investor Relations consulting firm for AZZ incorporated. With us today on the call representing the company, are Mr. David Dingus, President and Chief Executive Officer; and Mr. Dana Perry, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a Q&A session. Before we begin, I would like to remind everyone this conference call includes statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed from time to time in documents filed by the company with the SEC. Those risks and uncertainties include, but are not limited to, changes in customer demand and response to products and services offered by the company, including demand by the electrical power generation markets, electrical transmission and distribution markets, the industrial markets and the hot-dip galvanizing markets; prices in raw material cost, including zinc and natural gas, which are used in the hot-dip galvanizing process; changes in the economic conditions of the various markets the company serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and availability of experienced management employees to implement the company's growth strategies. The company can give no assurance that such forward-looking statements will prove to be correct. AZZ assumes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise. With that having been said, I'd like to turn the call over to Mr. David Dingus, President and Chief Executive Officer of AZZ. David? David H. Dingus: Thank you, Joe, and thanks to each of you for taking the time to join us for the conference call for the third quarter of fiscal 2013, which ended on November 30. We're extremely pleased with the results for the quarter and the first 9 months of fiscal '13. Our operating results for the first 9 months reflected 25% improvement in revenues, a 62% increase in net income. Earnings per share increased by 61% and backlog improved 63% when compared to the prior year. It was another quarter of effective identification and execution of opportunities and strategic initiatives. These comments apply both to our third quarter and the first 9 months of fiscal '13. The operating results for the Electrical/Industrial segment and the Galvanizing Services segment were as anticipated and internally forecast. Nuclear Logistics continued to make a positive contribution in the quarter for orders, revenue and operating income. For the third quarter, year-over-year growth in revenues for the Electrical segment was 38% and the operating income was 57%. Galvanizing Services segment had another outstanding quarterly operating performance, most served markets reflect good demand. The strong third quarter reflected a 23% growth in revenue and a 32% growth in operating income when compared to the prior year. Tonnage was up 23%. Solar power generation projects, transmission line work, OEMs and acquisitions positively impacted the quarterly growth when compared to the prior year. We're extremely pleased that we were able to reach agreement to acquire another Canadian galvanizer, which was effective January 2, 2013. This continued our efforts to consolidate the Canadian market and become a leading supplier of galvanizing services to the Canadian market. G3, while relatively small in terms of production and revenue, has a rich heritage of providing superior levels of service and support to the customers in the Canadian Maritimes market. The existing operating management will remain with the company, and the results are expected to be accretive from the date of acquisition and for the first 9 months of ownership. We continued to demonstrate our commitment to quality and service, and take advantage of all opportunities to maximize volume and market share while maintaining pricing. The completion of another successful quarter, financial strength of the company and a great group of employees has reflected our record-setting year-to-date operating results and confidence we have in our future. With that as an overview, Dana will now give us a review of the operating results for the third quarter of fiscal '13. Dana L. Perry: Thank you, David. At this time, I will review our unaudited consolidated results for the quarter ending November 30, 2012. As outlined in our press release, revenues for the quarter ending November 30 were $149.7 million as compared to $116.5 million in the prior year. Net income and diluted earnings per share for the quarter were $15.4 million and $0.60 as compared to $10 million and $0.39 in the prior year. Our book to ship ratio for the quarter was 102%, ending the quarter with a backlog of $215.8 million. The acquired backlog of NLI on June 1 was $78.5 million. Our backlog at the end of our previous fiscal year end was $138.6 million. Our Electrical/Industrial segment generated 40% of our revenues for the quarter while our Galvanizing Services segment generated 60%. With the acquisition of NLI, we anticipate that the end of the fiscal '13, our Electrical/Industrial will contribute 42% of our overall revenues while the Galvanizing segment will contribute 58%. In our Electrical and Industrial Products segment, we recorded revenues for the quarter of $60.4 million as compared to the prior year results of $43.8 million. The increased revenues were results of increased order intake in the last 2 quarters of fiscal 2012, as well as the inclusion of the acquisition of NLI. Operating income was $9 million as compared to $5.7 million, and operating margins were 14.8% for the quarter compared to 13% in the prior year period. Operating profits and margins increased for the comparative period due to leverage obtained from increased revenues, a limited amount of improved pricing, as well as the inclusion of the acquisition of NLI. NLI contributed $16.4 million to revenues for the quarter. Without the amortization of intangibles resulting from the acquisition of NLI, pro forma margins for the quarter would have been 17.4%. Revenues in our Galvanizing segment for the quarter were $89.3 million as compared to $72.6 million recorded in the third quarter in fiscal 2012. The increased revenues resulted from continued improved demand from the renewable energy, industrial and OEM markets. Operating income was $24.5 million compared to $18.6 million. And operating margins for the quarter were 27.4% compared to 25.5% during the third quarter of last year. A loss was recorded in the amount of $1 million, which was a result from the loss production associated with the fire at our Joliet facility. This loss, as well as a portion of future loss associated with the facility will be partially offset with insurance proceeds from our business interruption policy in future quarters. Without this loss, margins would have been 29%. For the 9-month period, cash provided by operations were $66.6 million compared to $46.8 million in the prior year. Earnings before interest, taxes, depreciation and amortization surpassed $80 million year-to-date. Our accounts receivable days outstanding were 49 days at the end of the third quarter as compared to 48 days at the end of the last fiscal year. Year-to-date capital improvements were made in the amount of $19.6 million, and depreciation and amortization amounted to $21.1 million. Our total outstanding debt including the third quarter was $211 million, and our cash balance for the end of the quarter was $49.5 million. Our leverage ratio, which is defined as our funded debt divided by our cash flow, at the end of the third quarter were 1.75x. The ceiling for our covenant requirement on our senior credit facility is 3.25x. We continued to believe that our balance sheet is one of our core strengths, and along with our strong cash characteristics, combined with excess to borrowings under existing banking arrangements, provides us with adequate flexibility to continue our growth of our company. At this time, David will give us an overview of our 2 operating segments. David H. Dingus: We continued to experience a slowdown in domestic fossil fuel power generation opportunities. Internationally, especially in the Middle East, the construction of power plants remains robust and we see strong demand for our products. We expect domestic fossil fuel generation market to skew further in the direction of natural gas for new construction and expect quotation activity to remain slow domestically in the near term. NLI continues to see strong demand for their products and services in the nuclear power generation market, and we expect this market to remain strong as new nuclear facilities are being built in the international market and as the aging reactor licenses in the domestic market are being extended. Demand for our domestic substation market is stable. Utility spending has not picked up significantly, and we expect that market to be at the current levels going forward in the near term. Over the long term, we continue to be optimistic regarding the opportunity associated with the upgrade of domestic distribution substation networks. High-voltage transmission market is seeing activity pickup internationally, particularly in Asia. Competition is intense from European and Asian vendors, and we hope to close projects despite severe pricing pressures in these markets. Industrial markets are showing a revival especially in the pipeline and mining sectors. Increasing domestic oil and gas exploration and production is driving demand for our products, and we expect these segments to remain strong in the near term. International mining opportunities remain strong. Our specialty lighting projects continued to show very positive growth when compared to prior periods. For the Galvanizing Services segment, the electrical utility market remains strong, and growth of our OEM business is encouraging. The strengths of these markets has more than offset the impact of a low GDP growth. When compared to the prior year, quotation levels reflect only very modest improvement. We continued to see a slow release of orders consistent with increasing concern over the state of economic recovery and regulatory environment. This has and may continue to impact our backlog. We achieved a book-to-ship ratio in the third quarter of 102%. The slow release of orders from the utility companies and lower domestic power generation demand adversely impacted the incoming order rates. We anticipate that our fourth quarter will be the most challenging in terms of incoming orders. This is consistent with the trend that we have seen in our prior fiscal years. In summary, our products and services are extremely well positioned to continue to benefit from market improvements and pricing levels. The timing of the projects and release of orders will always have an impact on quarterly recognition of bookings, backlog, revenue and earnings, and will result in quarter-to-quarter fluctuation, which may be greater than true changes in the market demand and our competitive position and success. Based upon the evaluation of information currently available to management, we are revising our previously issued guidance for fiscal '13 for revenues to be in the range of $575 million to $585 million, and for earnings to be within the range of $2.35 to $2.45. The previously issued guidance was for revenues to be in the range of $575 million to $600 million, and the fully diluted earnings per share to be in the range of $2.25 to $2.40. We anticipate reporting strong operating results that reflect year-over-year improvement in the fourth quarter of fiscal 2013. However, our current guidance does not anticipate that the fourth quarter will be as strong as the previous quarters of fiscal 2013. As we continue to grow in the Canadian market and the reduced production days due to holidays during our fourth quarter is resulting in more seasonality of our operating result than we have traditionally seen. This is particularly true for the Galvanizing segment. Achievement of these projections would be our 26th consecutive year of profitability and will be a record setting both in terms of revenue and earnings. Our estimates assume that we will not have any adverse appreciable change in our current market conditions, competitive activity, including pricing or significant delays, and the delivery or timing and receipt of orders of Electrical/Industrial products and/or demand for our Galvanizing Services. The strength of our balance sheet, the confidence of the management team and the strong customer acceptance of our products and service gives us the confidence to aggressively pursue additions to our product and our markets. I thank you for your participation today, and we would like to open it up for questions at this time.

[Operator Instructions] And our first question will come from Brent Thielman of D.A. Davidson. Brent Thielman - D.A. Davidson & Co., Research Division: It looks like the E&I sales were roughly flat on an organic basis, and is that principally due to kind of the slowdown you're seeing in terms of domestic fossil fuel power plant opportunities? And then also I guess, the guide down in revenues for the year, is that more so for the base business or for NLI? Just maybe a little bit more color around that. David H. Dingus: Well, in the downturn -- the most severe downturn that we've seen compared to the prior year that's causing more of a flatness is in the domestic fossil fuel market. And we only had a very strong year last year in natural gas domestically. The international market has picked up but not at the pace to offset it. We think that going forward and it will be able to do that. NLI's demand is increasing, it's been strong, and we're very optimistic as to what it looks like going forward. Brent Thielman - D.A. Davidson & Co., Research Division: Okay, that's good to hear. And then any implications or impact from Hurricane Sandy in the quarter, as well as going forward? David H. Dingus: No, nothing of significance, Brent. Brent Thielman - D.A. Davidson & Co., Research Division: Okay, And then just lastly, SG&A, I guess, was a little higher than I was anticipating. Anything unusual in the number and maybe some thoughts going forward in terms of modeling? David H. Dingus: It is -- and since we're having a better year. Naturally, profit sharing drives that up, and then we had some acquisition spending also.

Our next question will come from Schon Williams of BB&T Capital Markets. Christopher Schon Williams - BB&T Capital Markets, Research Division: I wonder if I could just turn back to E&I again. Sequentially, a pretty big tick down, Q3 versus Q2, I mean a 10% decline sequentially, yet margins actually perked up a little bit, about 80 basis points. I wonder if you could just comment a little bit about what you saw last quarter versus this quarter in terms of the top line and marginally. David H. Dingus: As we talked about before, Schon, quarter-to-quarter is really difficult for us to do in E&I. One order can swing significantly more than the other. But NLI is having a very positive impact on our margins even after amortization as well before amortization, and they're becoming a larger and larger piece of that E&I as our domestic market is decreasing and our international market is starting to turn around. So I don't think there's anything that you can read excessive to the change from quarter-over-quarter other than that's the natural transitioning of our markets. Christopher Schon Williams - BB&T Capital Markets, Research Division: Okay. And then you talked a little bit, I think excluding NLI it looks like revenues were kind of flattish for that business on a year-over-year basis. Can you maybe talk about what the organic orders look like within E&I? Or are they kind of -- are they flatfish as well? David H. Dingus: Well, without NLI, it's all organic, isn't it? Christopher Schon Williams - BB&T Capital Markets, Research Division: Well, I'm just saying that -- yes, certainly, with -- excluding NLI, I'm just saying what did your core order growth look like? If I excluded any orders that NLI got, do you think your core business -- were those orders flat as well, or do we actually see those declining? David H. Dingus: They were essentially flat. Christopher Schon Williams - BB&T Capital Markets, Research Division: Okay, okay. And then last question, the G3 acquisition, it looks like it's maybe -- I guess, it's one location up in Canada. I mean, would it be safe to assume that's kind of $5 million to $10 million in revenue? David H. Dingus: Well, again, we're in a pretty non-populous area of Canada, and we're the only galvanizer there, so yes, it's relatively small. So yes, the range would be towards the lower end of that.

[Operator Instructions] Our next question will come from John Franzreb of Sidoti & Company. John Franzreb - Sidoti & Company, LLC: I'm sorry if you've addressed this question, I got disconnected. Could you talk a little bit about the acquisition pipeline, a little bit about what the timing issue you see going forward? You've added a lot recently. Maybe kind of address your appetite in the near term. David H. Dingus: I think, John, that it is continuing to strengthen as it has all through this fiscal year. I think, we're seeing more viable opportunity on both sides of the business. We have been extremely successful in the Canadian acquisition, that naturally will slow down a little bit just simply from the number of candidates that there are in the Canadian market, but we're going to pursue that. But we still like some of the things we're seeing in the E&I segment. Nothing is that close at this point, but we are encouraged that things are a little more reasonably priced. Opportunities are -- that fit us well are out there, so we're going to pursue that. And our appetite is very strong, is very strong. John Franzreb - Sidoti & Company, LLC: David, with a very strong appetite, what are your thoughts about galvanizing in Europe? You've kind of thought about it previously as a longer-term opportunity. Has that timeline narrowed at all? David H. Dingus: No, it hasn't, John. I wish it would, but -- because we have a very strong appetite. But as you've heard me talked about before, the European market is already more consolidated than in the -- when we started in the U.S. market. So whatever play we're able to do in that market, it's going to be pretty good sight and it's going to take some time to convince them to come over. So, as well as logistically, it's hard for us to do a 2-or 3-unit deal, can be probably a 5- to 7-unit deal at a minimum. Ideally, it'd be a 10- to 15-unit transaction, and we would love for the phone to ring and say that they're ready to start talking to us. John Franzreb - Sidoti & Company, LLC: Okay. And David, I know you don't release fiscal 2013 guidance until next week. But can you talk a little bit about when do you think you'll see a more meaningful turn in your E&I backlogs? I mean, not anything imminently, but when do you expect to see -- what are your customers telling about the CapEx budgets, and how is it kind of playing out out there? David H. Dingus: John, I think if it plays out the way we're anticipating, we'll see an improvement in our E&I backlog from international projects, probably 6 to 9 months before we'll see an improvement in our domestic. Now, there is some improvement that we may get in the domestic from the pipeline work and some more towards the industrial, but the pure electrical power generation and the high-voltage transmission should happen about 6 to 9 months earlier in the international market than it does in the domestic. We don't see anything out there that's probably going to change that, we wish it were. But the pickup in the international market is encouraging, and I think that will be our first sign that the market is trending in the direction waiting on it to trend.

Our next question will come from Jon Braatz of Kansas City Capital. Jonathan P. Braatz - Kansas City Capital Associates: Dave, you talked about Nuclear Logistics being very strong. And I guess my question is, since we don't have the numbers, but on a year-over-year basis, what is Nuclear Logistics growing at, the revenue? Can you give us a little insight on that? David H. Dingus: 10% to 15%. Jonathan P. Braatz - Kansas City Capital Associates: Okay, all right. Would you see given the environment at the moment that, that would continue into next year? David H. Dingus: I think so. I mean, I think it's important to point out that part of that growth as we continued to expand our served market, particularly in the international markets. So we're picking up -- we're having organic growth probably in that 10-plus-percent and the other is coming from continuing to expand it. And then the new regulations that are anticipated as a result of the Japanese incident should only drive our business even more. So we don't see anything slowing that down for a number of years. And we believe that it's at least a 10% business -- 10% plus growth for the next few years and hopefully closer to the 15%. Jonathan P. Braatz - Kansas City Capital Associates: Okay. Do you think you can leverage your expenses and their bottom line expand a little bit faster rate? David H. Dingus: It's so engineering and management and people intensive, you don't get a lot of leverage points on that. But the main thing is when that amortization of that backlog drops off and we pick up that 2 to 3 points from there, so I think the rate that it's operating at is pretty -- has room for improvement naturally. There's always some low-hanging fruit when you get some more volume through there, but it doesn't lend itself to a real quick leverage point because like I said, it's so people and engineering intensive. Jonathan P. Braatz - Kansas City Capital Associates: You'll still have a full amortization for next year, correct? Or for... David H. Dingus: Yes, we will. Jonathan P. Braatz - Kansas City Capital Associates: Okay, okay. And then a couple other questions. It looks like, and I don't have all the -- you didn't give us all the numbers, but it looks like the core galvanizing operations revenue growth slowed to sort of the 10% area. And it looked like the previous quarter, it was sort of in the upper teens. If my numbers are correct, was there any change in the market conditions that might account for that? David H. Dingus: No, not in particular. I think, what you were seeing, the growth in the prior quarters that drove that to such a higher percent was we had so much solar work coming at us, that it drove that up. Now that is settling down. And I hope it settles at 10% for a long time. But you had that big inrush of solar work coming in, in the prior quarters, that drove that organic up to a greater number. Jonathan P. Braatz - Kansas City Capital Associates: Okay. And one last question. The Joliet facility, when do you think that might be opening? David H. Dingus: Probably in July, August time frame of next year.

Our next question will come from Rob Longnecker of Jovetree Capital.

Just following up on that last question, can you guys actually give an organic tonnage growth for the galvanizing business for this quarter and maybe for the previous quarter as well, please? David H. Dingus: I don't have that in front of me.

Okay. And then the end market in Canada for galvanizing, is it pretty similar customer base that you guys have in the United States? David H. Dingus: I'm sorry?

The kind of customer mix and the galvanizing mix Canada, is it similar to the United States? David H. Dingus: The customer profile is very, very similar to what our U.S. business is, yes.

Okay. And then the last question, I think, when you guys did Nuclear Logistics, there was a discussion of potential additional $20 million in earnout. Where does that stand right now? David H. Dingus: Well, in terms of the rules, we have to monitor that as we go on. We think it's going to be a minimum of $10 million and could be potentially $20 million. And our -- we have recorded it, the $10 million is all reflected in our indebtedness.

Our next question will come from Noelle Ditts of Stifel, Nicolaus. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: Just to start first with a housekeeping question, could you talk about the kettle cost of zinc in the quarter versus your zinc purchases? David H. Dingus: Right. For the quarter, this is the cost that we amortized was $0.96, and the average LME was $0.95. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And then sticking with galvanizing, given some of the changes you've had with the acquisitions and then the very strong growth you've seen in some of these segments like solar and transmission towers, can you just maybe give us an update on how that business breaks down now by end market, even if it's kind of rough, how much is industrial, how much is electrical and telecom, just provide us an update with that? David H. Dingus: 35% is electrical and telecommunications, 15% is OEMs, 30% is industrial, 10% is bridge and highway, and 10% is petrochem. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: Great. And then on the E&I side. First, I just wanted -- it was a few questions ago, but you said that you expected -- on the high-voltage side and power gen side, you expected the international market to lead the U.S. market by, I think, by 6 to 9 months or something like that, you said. I guess, I just -- I'd like a little bit more clarification there. I guess, I just don't understand where you see a connection there. I guess, when I think about the market and say I look at the transition investment in the U.S., that's a very powerful trend that's happening right now. You have a very niche product in that market. But I just don't completely understand what you're saying about this kind of connection. So if you could just expand there, I'd appreciate it. David H. Dingus: No. As we've told you several times, the transmission work that's going on in the U.S. does not drive our E&I business. It drives our galvanizing business. So we don't get a driver from that because we're running hundreds and hundreds of miles of overhead towers that doesn't drive our E&I work. And my comment, we would see a larger growth in backlog from international power generation and high-voltage transmission. Now what drives the transmission market on the international is when you build an international power plant, you build the transmission grid, you build a distribution network, you build the entire thing. So we get from A to Z of the package. So what we're participating on there is hydro project, delivering the power from the base of the hydro plant all the way up to the top to tie in to the grid, that's high-voltage transmission compressed gas work. It's not your -- some overhead power lines. If it's an the overhead power lines, we don't do anything that hangs on the power. And it's announced, how many programs -- the Middle East is building in natural gas, how much they're building in nuclear. China has picked backup in the process. So I don't see anything that would say our E&I business is going to be driven more dramatically domestically than internationally. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: I'm sorry, I was just using that as an example. I was just trying to understand better why you thought -- why you were citing that timing. But that's fine, I'll actually take that off line.

And ladies and gentlemen, that will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Dingus for his closing remarks. David H. Dingus: We appreciate your participation today. As was indicated earlier in the conversation and comments, we will be issuing guidance for our next fiscal year by the end of next week of the anticipated plan. And we won't be doing it via conference call just via a press release, and then we'll delve into it in more detail at our next scheduled conference call in April. Again, thank you for your participation. We trust you all had a wonderful holiday, and have a great day. Thank you.

Thank you, sir. Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.